IBM and Northern Trust have inked a deal to develop blockchain technology to improve the management of private equity funds and services.

The partnership, announced on Wednesday, is "the first commercial deployment of blockchain technology for the private equity market," according to Big Blue.

The private equity market, while attractive to investors and businesses, has seen little technological investment or innovation in recent years. However, as calls for greater transparency, efficiency and security are made -- especially in a world where cyberattacks are a common occurrence -- private equity funds and services need to address the lack.

To tackle the problem, IBM and Northern Trust have turned towards the blockchain. Blockchain technology is most commonly associated with cryptocurrency and has been used in the past as a kind of "digital ledger" which records virtual currency transactions from wallets, creating a chain to show where these assets have been traded.

While there are ways to "wash" currency and obscure cryptocurrency sources and trades, the underpinning blockchain technology itself has other, useful applications -- such as a means to manage other financial systems and records.

Blockchain is a method of making transactions more open and transparent through networking. The "master list" of transactions is stored by every participant in a chain, making it very difficult to fiddle the numbers or disguise fraud.

According to IBM, the companies have created a "security-rich" blockchain which is based on the Hyperledger Fabric, a Linux Foundation open-source distributed ledger project designed with business and IoT applications in mind.

The technology utilizes IBM's cryptography and key management technology to improve the security of the ledger, and scalability is kept in mind due to support from IBM Cloud.

The blockchain solution, made available through Unigestion and Northern Trust, will grant investors and fund managers greater transparency, and will also give regulators access for auditing when required.

To take the hassle out of regulatory and legal compliance, the technology has also been designed to support current rules and was created by working with government officials and regulators during the process.

Ownership stakes can be transferred and managed through the ledger, and the companies say the service offers "one version of the truth" to users on the platform.

"Current legal and administrative processes that support private equity are time consuming and expensive," said Peter Cherecwich, president of Corporate & Institutional Services at Northern Trust. "A lack of transparency and efficient market practices leads to lengthy, duplicative and fragmented investment and administration processes. Northern Trust's solution is designed to deliver a significantly enhanced and efficient approach to private equity administration."

In related news, earlier this month IBM announced the general availability of Watson for Cyber Security, which augments security professionals' tools to repel cyberattacks through analytics and machine learning.

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